Insurer expects personal lines overhaul to produce growth in 2013

Karl Bedlow, Zurich

Zurich incurred claims of £19m across the UK and Ireland from the June flooding, according to Zurich’s UK personal lines managing director Karl Bedlow.

The claims hit both the personal lines and commercial parts of Zurich’s UK general insurance business, Bedlow said.

“It is worth remembering that under our Zurich Municipal business there are quite a lot of homes insured under that through housing associations and things like that,” explained Bedlow. “So the commercial business, in which Zurich Municipal sits, has quite a lot of domestic exposure as a result of the business it writes.”

Zurich’s UK general insurance business reported a 26% drop in operating profit as weather claims, coupled with an adjustment to pension calculations, added four points to its combined ratio.

Gross written premium dropped 3% to £846m following the company’s overhaul of its personal lines book. It outsourced the running of its direct motor business to Endsleigh and the broker motor book to Broker Direct. The new Zurich-branded direct motor  business was relaunched at the end of last year, while the broker motor offering was introduced in the second quarter this year.

It is due to launch the revised homeowner offering in the fourth quarter this year.

Despite the premium drop in the first half, Bedlow expects the changes to start producing growth soon.

“As those products come on stream we will see the premiums stabilise and start to grow back into 2013,” he said.

While declining to give specific volumes, Bedlow said that in the relaunched broker and direct motor “we are writing the kind of volumes we expected to write. The operational platforms are working well and they are performing at the cost levels that we planned, which we know is pretty fundamental for such a commoditised market.”

He added that brokers had responded well to the new motor product. “The brokers were pleased to see Zurich back in the motor space with a competitive offering,” he said. “We’re pretty pleased with how that is going and looking forward to repeating that with home later on in the year.”